Question: Continuing Company Analysis-Amazon: Times Interest earned Amazon.com, Inc. is one of the largest Internet retailers in the world. Walmart Stores, Inc. is the largest retailer

 Continuing Company Analysis-Amazon: Times Interest earned Amazon.com, Inc. is one of

Continuing Company Analysis-Amazon: Times Interest earned Amazon.com, Inc. is one of the largest Internet retailers in the world. Walmart Stores, Inc. is the largest retailer in the United States. Amazon and Walmart compete in similar markets; however, Walmart sells through both traditional retail stores and the Internet, while Amazon sells only through the internet. Interest expense and Income before income tax expense from the financial statements of both companies for two recent years follow (In milions): Amazon Walmart Year 2 Year 1 Year 2 Year 1 Interest expense $ 210 $141 $2,461 $2,335 Income (loss) before income tax expense (111) 274 24,799 24,656 a. Compute the times interest earned ratio for both companies for the two years. Round your answers to one decimal place. Amaron Walmart Year 2 Year 1 Year 2 Year 1 Times Interest Earned 0.5 2.97 11.1 11.6 Ratio b. Based on your calculations for Amazon above, which of these statements is correct? c. Does times interest eamed ratio less than 10 mean that creditors will not get paid interest? d. Interpret Walmart's interest coverage from Year 1 to Year 2 e. Which company appears to have the greater protection for creditors? Continuing Company Analysis-Amazon: Times Interest earned Amazon.com, Inc. is one of the largest Internet retailers in the world. Walmart Stores, Inc. is the largest retailer in the United States. Amazon and Walmart compete in similar markets; however, Walmart sells through both traditional retail stores and the Internet, while Amazon sells only through the internet. Interest expense and Income before income tax expense from the financial statements of both companies for two recent years follow (In milions): Amazon Walmart Year 2 Year 1 Year 2 Year 1 Interest expense $ 210 $141 $2,461 $2,335 Income (loss) before income tax expense (111) 274 24,799 24,656 a. Compute the times interest earned ratio for both companies for the two years. Round your answers to one decimal place. Amaron Walmart Year 2 Year 1 Year 2 Year 1 Times Interest Earned 0.5 2.97 11.1 11.6 Ratio b. Based on your calculations for Amazon above, which of these statements is correct? c. Does times interest eamed ratio less than 10 mean that creditors will not get paid interest? d. Interpret Walmart's interest coverage from Year 1 to Year 2 e. Which company appears to have the greater protection for creditors

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!